Exchange efficiency with weak ownership rights

Oren Bar-Gill, Nicola Persico

Research output: Contribution to journalArticle

4 Scopus citations

Abstract

We show that efficient exchange obtains independently of the degree to which a legal system protects the rights of owners. We study a number of different legal rules, including property rules (strong protection), liability rules (any party can take the owner's asset but must pay a legally determined compensation), and even rules that protect the owner's interests very weakly (liability rules with a very low compensation level). Efficiency is obtained as long as the degree of protection provided by law and by the bargaining protocol is not "too" inversely correlated with a party's valuation of the asset.

Original languageEnglish (US)
Pages (from-to)230-267
Number of pages38
JournalAmerican Economic Journal: Microeconomics
Volume8
Issue number4
DOIs
StatePublished - Jan 1 2016
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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